Law Firm Books CleanupThe picture stops before any entry.
No client name, no matter number, and no dollar of ours. The scene is a composite.
If this is your monthWhat the picture already shows.
Picture a month whose bank statement was opened and whose client ledger was not. A settlement check was booked entirely as a fee. An advanced fee moved to the operating account before it was earned. The picture stops before any entry is made.
The tax sentence in that picture is the one the attorney guide already printed. A cash basis retainer is generally taxable when received, while the trust transfer waits until the fee is earned. The guide's cover says it is not an official pronouncement and cannot be cited as the position of the Service.
Why the call opens on the shut paper.
It is the week the return is already drafted, and everyone wants the month called finished. The client ledger for one matter was never opened. We start the call there.
A worked picture, with no client's name and no dollar from a real file. The statement was opened. The settlement was written entirely as a fee. An advanced fee moved to the operating account before it was earned. We put the client's share back on its own line, we leave the unearned fee in trust, and we open the month again. A drafted return does not make a shut ledger into a closed month.
There is a week when everyone wants the month called finished because the return is already drafted. We can all feel that impatience. A trust month has the same pull. Calling it closed does not open the ledger that was never read. The afternoon can be ordinary. The shut paper is still shut.
The conversation opens on the paper that was never looked at, then on whether the return already treated a trust deposit as income. The scene is invented from the guides, and no client's matter is described here. If the picture is yours, send the month and say which paper stayed shut.
Two stories about one deposit are the part owners feel in their stomach. The trust account still holds the money because the fee was not earned. The cash basis return may already be treating the receipt as taxable. Both can be true, and pretending they are the same story is how a later amendment starts. We read the month and the return side by side before anyone picks a number to move.
The picture also refuses a rescue entry. A month that was called closed does not get a quiet edit that makes the four papers agree after the fact. If they disagree, the month opens again, the missing ledger is written, and the fee moves only when it has been earned. That is slower than a speech. It is the only order that survives a later question.
The call stops before an entry that would rewrite a month already called closed. We open on the paper nobody looked at, then on whether the return already treated a trust deposit as income. Those two questions are the whole meeting. A drafted return does not open a ledger that nobody read.
Sources. A composite drawn from the trust account duty and Publication 5602. p5602.pdf.
If the picture is yours, send the month.
Statement, client ledger, settlement, or advanced fee.